Industry moves to keep cards in diners' hands

ALPHARETTA, Ga. - It's become routine for customers to swipe their credit or debit cards at consoles in fast-food joints, gasoline stations and grocery stores. So why do we still hand over the plastic at sit-down restaurants?

Pay-at-the-table systems are popular in Europe and other parts of the world, but they haven't yet caught on in the United States, largely because equipment makers haven't been able to point to a reason why restaurateurs should invest in the gear.

Manufacturers now see an opportunity. A rise in the number of "skimming" scams in which waiters use hand-held computers to quietly record customers' credit card information and sell it is creating a sense of urgency. So is an increased push by managers to speed the flow of diners during peak hours.

"Restaurants are the last holdout where you still give up your credit card. That's why we think this is the next logical step," said Paul Rasori, VeriFone Inc.'s vice president of marketing.

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Verifone's system, called the VX-670, is about the size of thick remote control and sports a square LCD screen and a numerical keypad. It accepts debit and credit cards and can automatically add the tip.

Once the customer swipes a card, the information is sent wirelessly to a computer in the restaurant. A tiny printer spits out a receipt.

The Blade, a competitor from rival Hypercom Corp., is a sleek, hand-held unit. But it also sports a touch screen that can double as a menu and an optional contactless reader that lets customers wave their cards instead of swiping them.

Both companies are betting restaurants will be more willing to buy the systems - which can cost several hundred dollars - as security threats increase.

Some studies suggest as much as 70 percent of all cases of credit-card skimming stem from restaurant scams. A 2005 report by Fair Isaac, the fraud-detection specialist, detailed how handheld skimming devices could take seconds to transmit data wirelessly to a fraudster and advised merchants to use table-side devices so cards are always in a customer's hand.

"If we can tell them they can increase table turns on peak hours by 1 to 4 percent, what's that worth to businesses?" said Scott Goldthwaite, vice president of Hypercom's global business development.

But the potential market for the systems in North America - estimated to be as large as $438 million - has been slow to take off.

It's partly because manufacturers haven't completely meshed their systems with cash registers and other hardware developed by restaurant management companies. But it's also because many manufacturers have to better sell the benefits, said George Peabody, director of emerging technologies advisory services at the Mercator Advisory Group.

Neither Verifone nor Hypercom -would reveal the price of the units, but both have launched tests in U.S. markets to gauge how the American diner reacts. Both companies specialize in secure electronic payment devices. Hypercom sells devices in Europe, China and Latin America. Verifone sells in Europe, Israel and Southeast Asia.

At Ray's Killer Creek, an upscale steakhouse in the north Atlanta suburb of Alpharetta, the VeriFone system didn't take long to catch on.

"We're all used to grocery stores and ATM machines," Wahlstrom said. "We all operate with our credit cards and debit cards in our daily lives."

As the happy-hour crowd filed into the restaurant on a recent weekday afternoon, many seemed unfazed by the new way to pay.

Wayne Smith and two friends had just scarfed down three steaks and were waiting for the $191 bill when his waiter plopped down the machine. He scanned his card, touched the square denoting a 20 percent tip and waited for his receipt.